Political Context

After five  years of political stalemate, presidential and legislative elections took place in Madagascar at the end of 2013. Mr. Hery Rajaonarimampianina was elected president and took office on January 25, 2014. The current Prime Minister, General Jean Ravelonarivo, was appointed in January 2015.

Municipal elections aimed at picking mayors and municipal councilmen/women for 1,693 municipalities took place on July 31, 2015. The participation rate, around 30% at the national level, was one of the lowest ever seen in Madagascar. The president’s party, New Forces for Madagascar (HVM), won mayoral seats in 62% of the municipalities. Two other large parties (the MAPAR, chaired by former President of the Transition Rajoelina, and the TIM, led by former President Marc Ravalomanana) won in several of the main cities. Senatorial elections took place on December 29, 2015. With the creation of the Senate, all democratic institutions mentioned in the Constitution will now be established. The National Assembly and the Senate form the Parliament. In case of need (resignation, impeachment, death of the President of the Republic), the President of the Senate would handle the interim.

Tensions that had run high between the Executive and the National Assembly in the past semester seem to have abated. The last parliamentarian session ended in December 2015 on several votes: the 2016 Budget Law, the new tribunal on trafficking of precious woods, and the law on public private partnerships (PPPs).

The government  has made the “fight against poverty through inclusive growth” its main objective and has developed a strategy centered on three pillars: improving governance, promoting economic recovery, and expanding access to basic social services. This strategy has been outlined in the Programme Général de l’Etat (PGE) and translated into a 2015-2019 National Development Program (Programme national de développement or PND) with an implementation plan.

Economic Overview

The latest World Bank economic update  reveals a slow economic recovery in 2015 due to the weak growth in tourism and mining sectors. Catastrophic meteorological conditions during the first half of 2015 also took a toll on the economy, resulting in higher inflation and a reduction of household purchasing power. Gross domestic product (GDP) growth is estimated at 3.0%  in 2015 and annual inflation rose to 7.6%.

Cheaper prices of petroleum products helped the government to reduce the burden of pump price subsidies in public expenditure and to lessen the trade deficit. Fuel subsidies decreased from 8.3% of total outlays in 2014 to 1.9% in 2015. Moreover, the gap between the pump price and reference price was eliminated since October 2015, and in March 2016 the government introduced formally a monthly automatic adjustment mechanism for pump prices to international prices and exchange rate fluctuations. Lower international petroleum prices also resulted in lower tax revenues on petroleum products. Tax revenues stood at 10%  of GDP in 2015, keeping the country’s performance below those of comparable countries.

The country continues to rank poorly on the ease of doing business index: 164 out of 189 countries in the 2016 Doing Business report. The government has set a goal to improve its performance and has identified a series of improvements to be adopted over the next 18 months.

Social Context

Madagascar ranked 154th out of 188 countries in the United Nations 2015 Human Development Report and the country did not reach any of the United Nations Millennium Development Goals (MDG) by 2015.

Madagascar is also highly vulnerable to natural disasters—including cyclones, droughts and flooding. It is estimated that one quarter of the population, or approximately five million people, currently live in zones at high risk of natural disasters.

Last Updated: Apr 11, 2016

World Bank Group Engagement in Madagascar

The World Bank (WB) has been partnering with Madagascar since September 1963. The first project was approved in 1966.

In February 2016, the WB  approved Madagascar's access to International Development Association (IDA) funds t in recognition of the extraordinary challenges that the country faces in exiting from the political crisis, ending the historic cycle of political fragility and forging a new path towards sustained, inclusive and resilient development. The annual IDA allocation for Madagascar will more than double for FY16 - FY18 (from $110 m to $230m per year), as long as Madagascar remains on a reform track.

The WB’s  current portfolio in Madagascar is composed of 11 investment operations with a total commitment of $618 million. Transport and infrastructure projects have  the highest share in terms of commitment at 27%, followed by education at 25% and rural development at 21%.

In 2015, the World Bank Group’s Board of Executive Directors approved a total of $95 million to support Madagascar’s efforts to improve public service delivery and to strengthen the social protection system for extremely poor households. The first operation, the Resilience Development Policy Operation (RDPO) financed by a $55 million IDA credit, accompanies the country’s efforts to consolidate the return to constitutional order and will provide budget support to the government to improve the efficiency and transparency of public service delivery. The second operation is a $40 million IDA credit for the Social Safety Net Project that will support the government in increasing the access of extremely poor households to safety net services and in laying the foundations for a social protection system. Recently in March 2016, two new IDA investment operations were approved. The first operation, the Electricity Sector Operations & Governance Improvement project (ESOGIP) in the amount of $ 65 million will aim to improve the operational performance of the national electricity utility (JIRAMA) and improve the reliability of electricity supply. The second operation, the Agriculture Rural Growth & Land Management project, in the amount of $ 53 million will aim to improve rural land tenure security and access to markets of targeted farming households in selected agricultural value chains.

In 2015, the World Bank Group also issued the Systematic Country Diagnostic (SCD) for Madagascar. It is grounded in earlier analytical work that had been done in 2014 on 18 sectors. It aims to identify the key constraints to accelerating progress toward the goal of ending extreme poverty in a sustainable manner. Poor governance, which partially finds its origin in poor dynamics among economic elites and political instability, is affecting the ability of the State to collect revenues, contributing to a poor investment climate and thus low investment, and preventing proper control of the country’s natural resources. The low level of fiscal revenues in turn prevents the State from undertaking investments to support a structural transformation of the economy and from providing sufficient basic services to develop the country’s human capital. Weak economic growth, stagnating human capital, and fast population growth have translated into a continuously declining per capita income, leading communities to rely more and more on natural resources thus contributing to resource depletion. This resource degradation could reach such a level that it would prevent people from coming out of poverty. The SCD report makes a series of prioritized recommendations along five axes: improving governance,  strengthening public finances, as a pre-condition to improving public service delivery and financing high impact investments, instituting policies that help unleash the private sector potential, aiming for higher human capital and  tackling poverty by improving the lives of the rural poor.

Last Updated: Apr 11, 2016

The World Bank Group’s assistance strategy aims to increase investments and growth as well as improve social indicators. Our program has been able to improve lives in the following ways:

  • Across the country, 5,550 community nutrition sites were established where over one million children under five (about one-third of all children are under five years old) are regularly weighed and mothers are counseled on the health of their children;
  • Nine mining communes have the capacity for participatory budgeting to improve governance;
  • PPP for the construction of the Ehoala Port has contributed to 648,000 T of exports from Fort-Dauphin;
  • 35,000 additional producers supported through 1,166 income-generating sub-projects to improve productivity in agriculture
  • 100,000 land certificates were delivered since 2006;
  • 563 additional poor communes have communication and broadband access;
  • 400,000 people benefited from cash for work projects;
  • 114 rural health centers received electricity;
  • Improved rice yields in irrigated projects areas from 2.0 to 4.43t/ha.
  • 5,000 poor families representing 16,000 children received conditional cash transfer to support their health care and education;
  • An additional 10% of the population can now have access to mobile telephony through the installation of telecom towers in remote regions.

The World Bank and a large number of development partners have also worked together since 1990 to support Madagascar’s National Environmental Action Plan (NEAP). This plan was implemented in the form of a three-phase $400 million Environment Program (EP). The engagement has yielded substantive results, including among others:

  • 75% reduction in the rate of deforestation over the past 20 years;
  • Creation of 2.4 million hectares of national parks;
  • Sustainable management of 4.5 million hectares of landscapes, primarily by non-governmental organizations (NGOs).

Last Updated: Apr 11, 2016

Prior to the 2009-2013 political crisis, external aid represented 40% of the government’s budget and 75% of public investments. Madagascar’s four biggest donors (the European Commission, the United States, the African Development Bank, and the World Bank,) accounted for about 80% of official aid to the island.

During the political crisis, most donors put on hold new commitments while continuing existing humanitarian programs that were being channeled through specialized agencies or non-governmental organizations (NGOs). In light of the political developments over the past two years, all donors have re-started their development programs to Madagascar, including through new commitments. Donors sent a strong signal of support by restoring budget support in 2014 and 2015 after the country returned to constitutional order.

Last Updated: Apr 11, 2016


Madagascar: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments